Question 1

A company had a bulldozer destroyed by fire.The bulldozer originally cost $125,000 with accumulated depreciation of $60,000.The proceeds from the insurance company were $90,000.The company should recognize:

Accepted Answer

A) A loss of $25,000. 
B) A gain of $25,000. 
C) A loss of $65,000. 
D) A gain of $65,000. 
E) A gain of $90,000.

Question 2

Total asset cost plus depreciation expense equals book value.

Accepted Answer

A) True 
 B)False

Question 3

A depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Accepted Answer

A) Book value depreciation. 
B) Declining-balance depreciation. 
C) Straight-line depreciation. 
D) Units-of-production depreciation. 
E) Modified accelerated cost recovery system (MACRS) depreciation.

Question 4

_______________________ depreciation recognizes equal amounts of annual depreciation over the life of an asset.

Accepted Answer

The answer of _______________________ depreciation recognizes equal amounts of annual...

Question 5

_________________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

Accepted Answer

The answer of _________________ refers to a plant asset that...

Question 6

A company purchased a rope braiding machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 750,000 units of climbing rope over its useful life.In the first year,105,000 units were produced.In the second year,production increased to 109,000 units.Using the units-of-production method,what is the amount of depreciation that should be recorded for the second year?

Accepted Answer

A) $25,200. 
B) $26,160. 
C) $26,660. 
D) $27,613. 
E) $53,160.

Question 7

_________________________ are capital expenditures that make a plant asset more productive; they often involve adding a component to an asset or replacing one of its old components with a better one,and do not always increase an asset's life.

Accepted Answer

The answer of _________________________ are capital expenditures that make a...

Question 8

Another name for a capital expenditure is:

Accepted Answer

A) Revenue expenditure. 
B) Asset expenditure. 
C) Long-term expenditure. 
D) Contributed capital expenditure. 
E) Balance sheet expenditure.

Question 9

______________________ depreciation charges a varying amount to expense for each period of an asset's useful life depending on its usage.

Accepted Answer

The answer of ______________________ depreciation charges a varying amount to...

Question 10

A company paid $150,000,plus a 6% commission and $4,000 in closing costs for a property.The property included land appraised at $87,500,land improvements appraised at $35,000,and a building appraised at $52,500.What should be the allocation of this property's costs in the company's accounting records?

Accepted Answer

A) Land $75,000; Land Improvements, $30,000; Building, $45,000. 
B) Land $75,000; Land Improvements, $30,800; Building, $46,200. 
C) Land $81,500; Land Improvements, $32,600; Building, $48,900. 
D) Land $79,500; Land Improvements, $32,600; Building, $47,700. 
E) Land $87,500; Land Improvements; $35,000; Building; $52,500.

Question 11

Match each of the following terms with the appropriate definitions.

-A condition which, because of new inventions and improvements, a plant asset is no longer useful in producing goods or services with a competitive advantage.

Accepted Answer

A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent

Question 12

Intangible assets include:

Accepted Answer

A) Patents. 
B) Copyrights. 
C) Trademarks. 
D) Goodwill. 
E) All of the choices are examples of intangible assets.

Question 13

_____________ are the federal income tax rules for depreciating assets.

Accepted Answer

The answer of _____________ are the federal income tax rules...

Question 14

Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the straight-line method.

Accepted Answer

A) $16,900. 
B) $16,000. 
C) $17,400. 
D) $18,379. 
E) $20,880.

Question 15

Plant assets are:

Accepted Answer

A) Current assets. 
B) Used in operations. 
C) Natural resources. 
D) Long-term investments. 
E) Intangible.

Question 16

The Modified Accelerated Cost Recovery System (MACRS)is part of the U.S.federal income tax laws and is used for tax reporting.

Accepted Answer